Q: Do I pay capital gains on my mom’s house if I sell it before she passes. It’s in a trust
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A:
If you sell your mom’s house before she passes, you may be subject to capital gains tax on the increase in value since the property was originally purchased. The taxable amount is calculated based on the difference between the sale price and the house's adjusted basis, which includes the original purchase price plus any improvements made over the years. Since the house is in a trust, the specific terms of the trust and the type of trust may also impact the tax implications.
Selling the house before your mom passes means that the stepped-up basis benefit is not applicable. The stepped-up basis usually allows heirs to use the property's market value at the time of the owner’s death as the new basis, potentially reducing capital gains. Without this benefit, you might face a higher taxable gain when selling the property.
It’s important to consider consulting with a tax professional or attorney to understand the full implications and explore any possible strategies to minimize your tax liability. They can provide detailed guidance based on the specific circumstances of your situation and the terms of the trust.
A: You need to talk to a tax attorney to figure out it of any explanations is applicable to your case. Some of them offer free consultations.
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